US Consumers More Confident in August as Gas Prices Dip
Following three straight monthly declines, U.S. consumer confidence rebounded in August as inflation moderated and gas prices fell.
The Conference Board said Tuesday that its consumer confidence index rose in August to 103.2 from 95.3 in July.
The business research group’s present situation index — which measures consumers’ assessment of current business and labor market conditions — rose for the first time since March, to 145.4 from 139.7 in July.
The board’s expectations index — a measure of consumers’ six-month outlook for income, business and labor conditions — rose from 65.6 last month to 75.1 in August.
Analysts surveyed by data provider FactSet had expected consumer confidence to rise slightly as gas prices have fallen in recent weeks. AAA motor club says the average price for a gallon of gas in the U.S. dipped to $3.85 on Tuesday from more than $5 per gallon in mid-June.
Although inflation appears to have moderated recently, the cost for most things remain much higher than they were a year ago. The government reported earlier this month that consumer prices jumped 8.5% in July compared with a year earlier, down from a 9.1% year-over-year increase in June. Inflation was unchanged from June to July, the first time that has happened after 25 months of increases.
Since March, the Federal Reserve has implemented its fastest pace of rate increases in decades to try to curb four-decade high inflation, which has punished households with soaring costs for food, gas, rent and other necessities. The central bank has lifted its benchmark rate by 2 full percentage points in just four meetings, to a range of 2.25% to 2.5%.
Last week at an annual economic symposium in Jackson Hole, Wyoming, Federal Reserve Chair Jerome Powell said the the U.S. central bank will likely need to keep interest rates high enough to slow the economy “for some time” in order to tame the worst inflation in 40 years. Powell has acknowledged the increases will hurt U.S. households and businesses, but also said the pain would be far greater if inflation were allowed to fester and that “we must keep at it until the job is done.”
“Looking ahead, August’s improvement in confidence may help support spending, but inflation and additional rate hikes still pose risks to economic growth in the short term,” said Lynn Franco, the Conference Board’s senior director of economic indicators.